Thursday 18 July 2019

Mortgage lending bouncing back after UK's Brexit extension - Davy

The extension of the Brexit deadline to October helped spark a recovery in Irish mortgage lending after a slow start to the year, according to Davy's chief economist. Stock Image
The extension of the Brexit deadline to October helped spark a recovery in Irish mortgage lending after a slow start to the year, according to Davy's chief economist. Stock Image

Michael Cogley

The extension of the Brexit deadline to October helped spark a recovery in Irish mortgage lending after a slow start to the year, according to Davy's chief economist.

Mortgage approvals jumped 10pc year-on-year to 4,926 loans in May, according to the most recent figures from the Banking and Payments Federation Ireland. The numbers also showed a near-20pc lift month-on-month, with around €1.14bn worth of mortgages approved.

Please log in or register with Independent.ie for free access to this article.

Log In

Davy's Conall Mac Coille tipped lending to continue growing throughout the quarter.

"Given residential transaction volumes have bounced back sharply in April and June, post the March 29 Brexit deadline, we expect mortgage lending will rise sharply in Q2 2019 from the €1.7bn recorded in Q1," he said.

"Heading into the second half of the year, the Brexit headlines are going to get even worse, so people will be looking to get transactions over the line this summer. If someone is planning on buying a house, they're likely to still go about doing it."

Mac Coille said that he was doubtful the UK would leave the EU without a deal at its next deadline day on Halloween.

"If they go to a no-deal Brexit, it's going to be a very extreme thing and the housing market is going to get caught up in that," he said. "That's a very extreme scenario with extreme circumstances and, ultimately, that may be why it doesn't happen."

Elsewhere, the Government has been urged to provide clarity on the future of the Help to Buy scheme, which offers first-time buyers of new homes a tax rebate of up to €20,000.

Representative body Brokers Ireland said the introduction of the incentive had been a "lifeline" for the industry.

"Announcing [any changes] now would prevent stress and panic in the latter half of the year as prospective buyers rush to get across the line if the future of the scheme remains in doubt," Brokers Ireland chief executive Diarmuid Kelly said.

"Home ownership in Ireland has declined from 80.1pc in 1991 to 67.6pc in 2016, according to census figures. This is a negative trend that carries huge implications for society. What is happening in the housing market in Ireland today will have long-term social impacts."

Speaking earlier in the month, Finance Minister Paschal Donohoe said that he will "signal well in advance" if he intends on making any changes to the scheme.

Donohoe said that around 80pc of applications to the scheme had been for property purchases worth less than €375,000.

Sunday Indo Business

Also in Business